In a journal article in 2002, Luthans & Church extolled the virtues of Positive Organizational Behaviour (POB), which is the study of "positively oriented human resource strengths and psychological capacities that can be measured, developed and effectively managed for performance improvement"  (p.59). One such element of psychological capacities that can be developed and therefore is of benefit to organizations seeking to improve Leaderhsip behaviours in order to enhance results, is Psychological Capital. This capacity is described by Luthans et al (2006) as "(1) having the confidence (self-efficacy) to take on and put in the necessary effort to succeed at challenging tasks; (2) making a positive attribution (optimism) about succeeding now and in the future; (3) persevering towards goals, and when necessary redirecting paths to goals (hope) in order to succeed; and (4) when beset by problems and adversity, sustaining and bouncing back even beyond (resiliency) to attain success" (p.388).  There have been several studies on Psychological Capital and one study of CEO's has shown that the Psychological Capital of leader's moderates their ability to display more Transformational Leadership (Bass & Avolio, 1993) behaviours, which is in turn is positively linked to a firm's performance (Peterson, et al, 2009).   

These qualities therefore help leaders to overcome obstacles to success and seek out solutions to challenging problems.  As such it can be argued that these are the very skills Leaders need to develop in the Global Financial Crisis, where there is no precedent from which to draw for solutions and where Leaders must face the challenge head on, overcome setbacks, and maintain the optimism to generate alternative solutions where needed.  

Given the potential benefits the firm and individual leaders can gain through cultivating more Psychological Capital, we are currently undertaking further research on the linkages between a Leader's level of Psychological Capital and their Transformational Leadership ratings.  We will be asking over 100 leaders from different companies to partake in this research and will be providing an outcome of this research in January 2010.

REFERENCES

Bass, B., & Avolio, B.J. (1993) Improving organizational effectiveness through transformational leadership, Thousand Oaks, CA: Sage

Luthans, F., Avolio, B.J., Avey, J.B., Norman, S.M., & Combs, G.M> (2006) Psychological Capital development: toward a micro-intervention. Journal of Organizational Behaviour, (27(3), 387-393

Luthans, F., & Church, A.H. (2002) Positive Organizational behaviour: Developing and managing psycholgical strengths. Academy of Management Executive, 16(1), 57-72

Peterson, S.J., Walumbwa, F.O., Byron, K., & Myrowitz, J. (2009). CEO positive psychological traits, transformational leadership, and firm performance in high-technology start-up and established firms. Journal of Management, 35 (2), 348-368.